AG says hired fundraisers' expenses can cut charities' take

'Tis the season for giving, but authorities are warning folks to make sure they know where their donations are going.

Because if it's a professional fundraiser asking for your money, they say, there's a good chance the solicitor is keeping most of it.

A new state law requires the director of charitable trusts to report the results of fundraising campaigns conducted here by paid solicitors for nonprofits. Sponsored by Rep. Neal Kurk, R-Weare, the law requires the reports to be posted in a "searchable format" on the state website.

The Attorney General's Office recently released the first such report, which details what percentage of donations to nonprofits actually went to the organizations and how much went to salaries and expenses of paid solicitors.

Popular charities

Many familiar names are in the report, from such national groups as Habitat for Humanity, Doctors Without Borders and Amnesty International to local police and firefighter organizations. The percentage of proceeds that went to the nonprofits ranged from zero to 100 percent.

Anne Edwards, an associate attorney general who is interim director of charitable trusts, said nonprofits and paid solicitors must register with the state and report both the gross revenues from fundraising campaigns and their associated costs.

"And in many cases, you'll see the total expenses match the gross revenue," she said.

"What we draw from that is that in those campaigns, the fundraiser is really just doing the campaign in order to support its business."

Ask questions

When a fundraiser calls, people need to ask how much of their donation is going to the charity, Edwards said. "People work very hard for the money that they earn, and they really want to make sure that this money goes to the organization and goes to the purpose that they're supporting."

According to the AG's report, Donor Services Group LLC of California conducted a campaign for the Humane Society of the United States from Nov. 1, 2011, to Oct. 31, 2012, raising $1,297,320. It listed its total expenses as $1,313,908, including $605,575 in salaries.

The percentage to the charity: zero.

It was the same for a 2012 campaign for the Natural Resources Defense Council Inc., which raised $348,708. Donor Services Group listed expenses of $408,870, a net loss of $60,166.

And DSG raised $269,221 for the National Parks Conservation Association in 2011-12, but its expenses totaled $290,274, so no money went to the charity, according to the report.

"What they're saying is it cost them $290,000 to raise $269,000," Edwards said. "That doesn't seem like a particularly strong business model."

Despite repeated attempts, Donor Services Group could not be reached for comment last week.On the other hand, a 2012 campaign by 2Listen LLC for Feed The Children raised $22,0887.94, and 100 percent went to the charity, according to the report.

Edwards said some paid solicitors have a threshold: "If we don't raise more than a certain amount of money, we're not going to take our expenses."

She said there are legitimate costs in raising money. "But to have it be 80 percent, 90 percent, 100 percent of the money being raised? It's significant."

Edwards said groups that support veterans, police and firefighters are among those on the list that only get a fraction of the funds raised.

"And we do raise concerns with the local organizations ... that we really think this is using their good name and their good reputation, and it's not for enough of a financial gain for them as a charity to allow their good name to be used."

More to the story

But some local organizations say the numbers don't tell the whole story.

FireCo LLC conducted a campaign for Professional Firefighters of New Hampshire in 2012, raising $343,824.90. It reported expenses of $290,591, including $136,046 in salaries, according to the report.

The PFFNH got $53,233, just 15 percent of revenues.

David Lang is president of PFFNH. "The public wants police officers and firefighters doing their job on the street, not raising money for the good things they do," he said. "In order to do that, you need to hire a professional to do that."

Lang said his organization has had "a 20-year relationship" with Tennessee-based FireCO LLC. The group previously organized "family entertainment" shows, and while expenses were high, the shows were popular with the local community.

Other fundraising campaigns provided fire-prevention coloring books to schoolchildren statewide and purchased carbon monoxide monitors for local fire departments. Those were among the "expenses" of the campaigns, Lang said.

And that's not evident in the AG's report, he said.

Still, Lang said the PFFNH no longer uses a professional fundraiser; he said changes such as the "Do Not Call" list and caller ID have made telemarketing less effective.

Edwards has another concern: "copycat" charities with similar names to well-known, respected groups.

Lang shares Edwards' concerns on that score. He said there are organizations in the report he's never heard of, including the Firefighters Charitable Foundation and the Association for Firefighters and Paramedics.

Enforcement needed

Lang would rather see the AG's Office delve deeper into what some of these "charities" are.

"We need stronger enforcement," he said. "We need a big stick to make sure that the people at their homes are not being taken advantage of."

Another nonprofit that says the AG's report was off the mark is the Appalachian Mountain Club.

The report lists a 2012-13 campaign that raised $172,464. Total expenses were $169,977, and the amount that went to the AMC was $2,486.09 - just 1.44 percent.

Teri Morrow, director of membership for the AMC, said the report is "more than a bit misleading." She said money that came in after the report deadline wasn't included in the total raised.

Morrow also said AMC contracts with Comnet Marketing Group not only for fundraising, but also to conduct membership drives. "We do a lot of talking to former members, asking them to rejoin," she said.

Morrow said using a professional solicitor is more efficient than other means of reaching supporters, such as direct mail.

"Telemarketing is a tiny portion of what we do, but it does efficiently identify people who haven't given before who'd like to give," she said. "And it does reach out to people who do like to give after having spoken to someone."

George Mallios is a Manchester police officer and treasurer of New Hampshire Police Association. The NHPA got 26 percent of the $134,439 raised in a 2012-13 campaign, according to the report.

Mallios said NHPA's contract with Police Publications Inc. has served it well in the past. But he said the board recently decided to do its fundraising in-house instead.

"Even if we raise 25 percent of last year's revenue but keep 100 percent of it, we'd raise as much," he said.

The NHPA is looking at events such as benefit tournaments that would bring local police officers into direct contact with those in their communities, he said.

"It's a transition phase," Mallios said. "We have some great ideas on the table, and we just have to implement them."

Don't be discouraged

Edwards said she doesn't want the new reports, which she hopes to issue quarterly, to discourage charitable giving.

"One of our concerns always in issuing a report like this is that people will say, 'I'm not giving at all.' And that is the last message we want to send because there are so many needs out there and there are so many charities that do such good work and use those donation dollars very, very wisely.

"But it comes down to: You really need to know who you're giving to."

Giving locally, Edwards said, "is a wonderful start."

"And in New Hampshire, we have more than 9,000 charities.... People can find a charity here to do just about anything they want to donate to.". A copy of the report can be found at : doj.nh.gov/charitable-trusts/professional-fundraisers.htm.